USD/CAD Looks All Set For Bearish Reversal

The US Dollar (USD) inched higher against the Canadian Dollar (CAD) on Wednesday, increasing the price of USDCAD to more than 1.3400 but the pair remains vulnerable because of repeated rejections at 1.3560 resistance area. The technical bias remains slightly bullish because of a Higher High in the recent upside rally.

Technical Analysis

As of this writing, the pair is being traded near 1.3429. A support can be seen around 1.3400 which is the confluence of psychological number as well as a short term horizontal support area as demonstrated in the given below chart. A break and daily closing below the 1.3400 support shall incite renewed selling interest, validating a move towards the 1.3238, a major horizontal support.

On the upside, the pair is likely to face a hurdle around 1.3513, the intraday high of yesterday ahead of 1.3560, the horizontal resistance area and then 1.3588, the swing high of the last major upside rally. The technical bias shall remain bullish as long as the 1.3263 support area is intact.

Canada Retail Sales

Nov 22 Canadian retail sales picked up in September as auto purchases climbed for the first time in three months on demand for new cars, data from Statistics Canada showed on Tuesday, reinforcing expectations that economic growth rebounded in the third quarter. Retail sales rose 0.6 percent, in line with economists’ expectations, but would have been flat without the increased purchases of cars and parts.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair on short term upside waves could be a good strategy in medium term.

 

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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